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Telematics business & financial review


3.3.1

strategic priorities

• Capitalise on the growing scale of our fleet management business
• Diversify into other Connected Car services opportunities
• Grow our partner ecosystem

3.3.2 Business review

SUBSCRIBER BASE

Our Telematics business has continued to grow throughout 2016, reaching more than 696,000 subscribers by the end of the year. This growth has been realised organically, and represents a 15% increase compared with the end of last year.

TomTom Telematics now serves more than 46,000 businesses worldwide, making us one of the leading telematics solution providers based on customers and subscribers.

A globally recognised leader

For the second year in a row, Telematics has been named as Europe's largest and fastest growing provider of fleet management solutions by market research firm Berg Insight.

The award recognises Telematics' strategy of growing through partnerships and integrations using WEBFLEET's open API, which introduces the business to new customer segments and strengthens our ambitions to support the fleet industry in its digital transformation.

Telematics was also named European Telematics Company of the year by Frost & Sullivan. The panel commended us for our successful implementation of industry best practices to innovate and meet changing customer needs and enable partners in different verticals to create applications suited to their individual sectors.

growth of Connected car

In 2016, Telematics increased its sales in the Connected Car space, with key contracts being kicked off and rolled out in 2017.

One of the biggest developments for 2016 has been the agreement signed with PSA Groupe to make WEBFLEET available for all connected Peugeot, Citroën, and DS fleet vehicles. This kind of alliance with a car manufacturer – using the data sent by manufacturer-fitted telematics units – is a first for TomTom Telematics and has been rolled out in France, Spain, Belgium and the Netherlands.

TomTom PRO 2020

In 2016, we launched our first driver terminal without navigation, the TomTom PRO 2020. This is a basic driver terminal that allows drivers to report on both the start and end time of work, as well as to select between business and private trips. The TomTom PRO 2020 is an easy and accessible way for fleet managers to work closer and more effectively with their drivers, and helps to remove some of the barriers for companies looking to enter the telematics market.

VDO

We also extended our partner network, most notably through the announcement of an integration with the VDO's Tachograph (one of the leading companies in the world of tachographs) and software, making the TomTom LINK 510 a key hardware component to download tachograph information, while the trucks remain on the road.

3.3.3 Telematics financial review

Telematics revenue in 2016 was €155 million, a 15% increase year on year (2015: €135 million). The recurring subscription revenue for the year was €118 million compared with €98 million in 2015, an increase of 21%.

Hardware and other services revenue was relatively flat compared with 2015. This was mainly due to a higher proportion of hardware rental in our new subscriber sales mix and lower uptake of the Driver Terminals as a category in line with general market developments.

Telematics EBITDA increased by 21% year on year to €59 million in 2016 (2015: €49 million), which led to an EBITDA margin of 38% in 2016 compared with 36% last year. EBIT amounted to €45 million in 2016, a 12% increase compared with last year (2015: €40 million). In 2016, Telematics operating expenses were impacted by the integration and amortisation expenses related to its recent acquisitions.

 

Table_4 Key Figures Telematics

(€ in millions,unless stated otherwise) 2016 20151 y.o.y. change2
Hardware and other services revenue3 36.8 37.2 -1%
Subscription revenue 118.4 97.8 21%
Total Revenue 155.1 135.0 15%
EBITDA4 59.1 49.0 21%
EBITDA margin (%) 38% 36%  
Operating result (EBIT)4 44.5 39.7 12%
EBIT margin (%) 29% 29%  
Monthly subscription ARPU (€) 14.9 15.9 -6%
Subscriber installed base (# in thousands) 696 605 15%
 
1. 2015 financial metrics exclude Finder S.A. as the acquisition is effective as of the end of December 2015.
2. Change percentages and totals calculated before rounding.
3. Other services revenue comprises installation services and separately purchased traffic service and/or map content.
4. The EBIT and EBITDA measure and reconciliation to our income statement is further explained in note 4 of the consolidated financial statements.

Business outlook

We are committed to innovation, sustained investment in R&D and capacity to increase scale and capitalise on growth.

New technologies such as Connected Car services provide more opportunities to develop our business beyond the traditional Fleet Management Services. 

We are also committed to continue to innovate and develop within our strategic partnerships. This sets us apart from competition, ensuring our technology enables industry partners to enhance their products and services, also allowing customers to continue saving money and improving operational processes.

Together with our partners we want to create new apps, solutions and integrations that will offer innovative benefits to customers in any industry, operating any type of vehicle fleet. These new technologies will help to revolutionise business processes through greater levels of automation and insight, and ultimately bring the technology closer to the driver.

3.3.3.1